U-46 applies for $4M in low-interest loans

Credit may still be hard to come by for some, but that won’t stop Illinois’ second-largest school district from applying for more than $4 million in loans.

In a unanimous vote, the Elgin Area School District U-46 board on Tuesday backed an application for more than $4.2 million in federally backed, low-interest Qualified Zone Academy Bonds.

The loans would enable the district to make improvements — typically small infrastructure projects — at 27 schools that have a high proportion of low-income students.

To qualify for a loan, at least 35 percent of a building’s students must qualify for free or reduced-cost lunches; the school must also secure a 10-percent match from a nongovernment donor.

To that end, U-46 has obtained commitments from local businesses for $424,590 — about 10 percent of the total loan amount the district is seeking.

Under the terms of the program, U-46 can either issue the bonds itself or essentially borrow the money from the state, which administers the federal program within its borders.

Chief Operating Officer Jeff King said that determination will be made when U-46 finds out how much it will receive.

“Whichever way is cheapest, that’s the way we’ll go,” King said.

Qualified Zone Academy Bonds can be used for renovation, buying equipment, curriculum development and staff training. They cannot be used for new construction.

The federal government subsidizes much of the interest cost, making the bonds a much better deal than traditional bonds, which can sometimes cost twice their advertised amount when interest is tallied.